USDA held their Ag Outlook Forum Thursday and Friday, providing some preliminary estimates of corn, soybean, and wheat acres and yields for this year. These estimates are not based on producer surveys, but instead what their economists say will happen.
USDA economists expect corn acres to be down 3.6 million acres from a year ago to 91 million acres with a 181 bpa yield. They expect soybean acres to increase by nearly 4 million acres to 87.5 million with an estimated yield of 52 bpa.
Arlan Suderman, Chief Commodities Economist with StoneX, says he doesn’t put much stock into these numbers because so much can (and will) change, but the media that writes about it does, which impacts the markets.
“Now, supply and demand do drive the markets in the long run. But in the short run, we know that the algo computers, the money that’s behind them, take the markets too far in both directions. They take it too low in bearish scenarios; they take it too high in bullish scenarios.”
Suderman says the USDA numbers essentially give these markets permission to go even lower. For soybeans, they’ve been doing some historical analysis at StoneX that doesn’t bode well for futures if it repeats itself.
“Since 2000, the soybean market has only spent 3% of its time in the $11 range, speaking between $11 and $11.99. It spends a lot of time above it, a lot of time below it, but that $11 range, it tends to just simply pass through. Now history doesn’t always repeat itself. But that does suggest if history were to repeat itself, that we’ll be dropping below $11 relatively quickly. That’s painful for farmers to hear, particularly if you may have soybeans left to sell.”
Suderman continued, saying, “I can’t tell you what the markets are going to do today, tomorrow, or the next day. I don’t have that crystal ball. If I did, I probably wouldn’t be sharing it. I’d be on a beach someplace. But I can say this: a lot of times, what this market needs is a final flush, and this looks a lot like a final flush. How low may it go? I don’t know.”
For more market insights, listen to the full interview with Suderman below.